OTTAWA, Aug. 14 /CNW Telbec/ - PharmaGap Inc. (TSX-V: GAP) ("PharmaGap"
or "the Company") today announced that it has filed a final short form
prospectus qualifying for sale a minimum of 6,666,667 and a maximum of
20,000,000 equity units (the "Units") at a price of $0.15 per Unit (the
"Offering"), for total proceeds of between $1,000,000 and $3,000,000 in
connection with an Agency Agreement entered into with Dundee Securities
Corporation and Wellington West Capital Inc. (the "Agents"). Each Unit
consists of one (1) common share and one (1) warrant to purchase a common
share at an exercise price of $0.20 for a two year term.
The Agents, acting as co-leads, have invited Capital Street Group of
Vancouver, a Limited Market Dealer, to join as Special Selling Group Member.
The Company has agreed to pay the Agents a selling concession consisting of
10% of proceeds raised, along with broker warrants equal to 10% of the Units
issued.
The Company has granted the Agents an option to purchase additional
Units, equal to 15% of the Offering, for purposes of covering over-allotments
and for market stabilization purposes. The option can be exercised in whole or
in part at any time over a period of 30 days following the closing of the
Offering. The Company anticipates closing of the Offering as soon as
practicable subject to receipt of all necessary regulatory and TSX-Venture
Exchange ("TSXV") approvals.
The Company intends to apply proceeds of the Offering to continue
progression of its lead drug, PhG-alpha-1 toward filing for clinical trial
approval, to continued development of its pipeline of products, to generation
of partnering and licensing opportunities for its lead product and pipeline
products, and to general corporate purposes.
The final prospectus is available on SEDAR (www.sedar.com). Copies of the
final prospectus are also available from Dundee Securities Corporation and
Wellington West Capital Inc.
The Company also announces its intention to issue 10,369,300 Units to SC
Stormont Holdings Inc. ("Stormont"), for aggregate gross proceeds of
$1,555,395 on the same terms and conditions as for the Offering (the "Private
Placement"), subject to approval by the TSXV. Following the Private Placement,
Stormont will hold 13,232,163 Common Shares, 10,369,300 warrants to purchase
common shares at an exercise price of $0.20 with a two (2) year term, and
Convertible Secured Debentures convertible into a total of 29,363,418 common
shares and 6,631,030 warrants to purchase common shares at exercise prices of
between $0.195 and $0.2625 with terms of up to two (2) years. Stormont also
holds options to acquire 3,193,811 common shares from the founders of the
Company (1,836,667 at $0.30 per share and 1,357,144 at $0.50 per share). Prior
to conversion of the Convertible Secured Debentures, exercise of warrants
arising from the Private Placement, and exercise of options on founder's
shares, Stormont will hold a 24% interest in the Company assuming the minimum
Offering and 19.3% assuming the maximum Offering. On a fully diluted basis,
assuming full conversion of all Convertible Secured Debentures, exercise of
all warrants outstanding and exercise of options on founder's shares, Stormont
will hold a 55.9% interest in the Company assuming the minimum Offering and
45.2% assuming the maximum Offering. Stormont is controlled by Roderick
M. Bryden, Chairman of PharmaGap. Neither the Corporation nor, to the
knowledge of the Corporation after reasonable inquiry, Mr. Bryden has
knowledge of any material information concerning the Corporation or its
securities that has not been generally disclosed.
PharmaGap's Board of directors (the "Board") has considered the connected
related transactions between PharmaGap and Stormont and the Board, except for
Mr. Bryden, who abstained from voting, unanimously determined that the related
transaction is exempt from the valuation and minority voting requirements of
Multilateral Instrument 61-101 - Protection of Minority Security Holders
("MI 61-101") pursuant to section 5.5(c) and section 5.7(1)(b) of MI 61-101
since the connected transactions are a distribution of securities for cash and
the connected transactions have a fair market value of less than $2,500,000.
The Board has further determined a disclosure period of less than twenty-one
(21) days is necessary with respect to the connected transactions in order to
meet critical funding requirements.
The Units being offered have not been registered under the United States
Securities Act of 1933, as amended, and may not be offered or sold in the
United States absent regulation or an applicable exemption from the
registration requirements. This press release shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of the
securities in any State in which the offer, solicitation or sale would be
unlawful.
About PharmaGap Inc.
PharmaGap Inc. (TSX-V: GAP), based in Ottawa, ON, is a biotechnology
company with a core focus on developing novel therapeutic compounds for the
treatment of cancer. PharmaGap's research platform targets cellular signalling
pathways controlled by Protein Kinase C (PKC) isoforms. PharmaGap's lead drug
compound, PhG-alpha-1, is in preclinical development and targets PKC alpha.
The Company's strategy is to out-license drug compounds to larger life
sciences companies at the preclinical stage. For more information on PharmaGap
please visit the Company's website at www.pharmagap.com.
Note: The TSX-Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release. No Securities Commission or other
regulatory authority having jurisdiction over PharmaGap has approved or
disapproved of the information contained herein. This release contains forward
looking statements that may not occur or may change materially.

For further information:

For further information: Robert McInnis, President & CEO, (613)
990-9551, bmcinnis@pharmagap.com